Apple turns over entire inventory every five days
In its eighth annual Supply Chain Top 25 (via Business Insider), Gartner analysts once again ranked Apple's supply chain as the best in the world, boasting an industry-leading 20.2 percent return on assets for the past three years as well as three-year revenue growth of 51.5 percent.
The Top 25 are calculated by creating a composite score, with the opinions of voters, Gartner analyst opinions and three-year weighted return on assets all counting for an equal 25 percent, while inventory turns and three-year weighted revenue growth account for 15 percent and 10 percent, respectively.
Apple stood out with a inventory turnover period of five days, calculated by dividing the 365 days in one year with the inventory turnover ratio or the cost of goods sold over uarterly average inventory, which in Apple's case is 74.1. The only other company to beat the Cupertino, Calif., electronics giant was McDonalds with 142.4 inventory turns equating to a 2.5 day turnover for total inventory.
Dell and Samsung followed Apple in the electronics category with turnovers every 10 and 21 days, respectively.
Kindle-maker and internet sales monolith Amazon took the second overall spot on three-year revenue growth of 37.7 percent and boasts an inventory turnover about once every 37 days. The way in which Amazon operates is novel, however, and continues to push the envelope of generally accepted inventory practices.
The ranking results may not be surprising given the pedigree of current Apple CEO Tim Cook, who is considered an "operational genius" and took over the company's supply chain in 1998, streamlining operations by cutting excess costs and built-up stock. An example of the changes made was Cook's decision to shut down 10 of the 19 company warehouses to limit overstocking, a move that brought inventory down from a month to only six days.